JUDGMENT OF 19. 5. 1982 — CASE 84/81 STAPLE DAIRY PRODUCTS v INTERVENTION BOARD FOR AGRICULTURAL PRODUCE
In Case 84/81 REFERENCE to the Court under Article 177 of the EEC Treaty by the High Court of Justice, Queen's Bench Division, Commercial Court, for a preliminary ruling in the case pending before that court between
THE COURT composed of: J. Mertens de Wilmars, President, G. Bosco, A. Touffait, O Due (Presidents of Chambers), P. Pescatore, Lord Mackenzie Stuart, A. O'Keeffe, T. Koopmans, U. Everling, A. Chloros and F. Grévisse, Judges, Advocate General: Sir Gordon Slynn Registrar: A. Van Houtte
gives the following
JUDGMENT
Facts and Issues
The facts of the case, the course of the procedure and the observations submitted under Article 20 of the Protocol on the Statute of the Court of Justice of the EEC may be summarized as follows:
I — Facts and written procedure
1. Council Regulation (EEC) No 652/79 of 29 March 1979 on the impact of the European monetary system on the Common Agricultural Policy (Official Journal 1979, L 84, p. 1) was adopted as a result of the setting up of the European monetary system. It provided that the amounts fixed in units of account for the purposes of the Common Agricultural Policy were thenceforth to be expressed in units of account known as “ECU” by means of a fixed coefficient. It also continued a system of franchises which had been in force in various forms since 1974. This system, the purpose of which is to avoid overcompensation by the application of monetary compensatory amounts, consists in reducing the monetary gap used for the fixing of monetarv compensatory amounts. For this reason, Regulation No 652/79 amended Regulation (EEC) No 974/71 of the Council of 12 May 1971 on certain measures of conjunctural policy to be taken in agriculture following the temporary widening of the margins of fluctuation for the currencies of certain Member States (Official Journal, English Special Edition 1971 (I), p. 257), as amended bv Regulation (EEC) No 1112/73 of the Council of 30 April 1973 (Official Journal 1973, L 114, p. 4), by adding a provision to the effect that the percentage or the average of the percentages to be applied to prices to obtain the monetary compensatory amounts was to be reduced by a certain rate. This rate was 1.50 points for Member States such as the United Kingdom with floating currencies, that is to say, not belonging to the European monetary system. As provided by the second paragraph of Article 5, Regulation No 652/79 was originally to apply until 30 June 1979, but its validity was extended until 31 March 1980 bv Article 1 of Council Regulation (EEC) No 1264/79 (Officii! Journal 1979, L 161, p. 1). On 18 February 1980 the Commission transmitted to the Council a series of proposals intended to consolidate existing agrimoneiary provisions and to introduce the ECU into the Common Agricultural Policy. However, no agreement was reached by the Council, and on 20 March 1980 the Commission submitted a proposal to extend the validitv of Regulation No 652/79 until 30 June 1980 (Official Journal 1980, C 81, p. 3). That proposal also failed to be accepted in time by the Council, the British Government having refused to agree unless the regulation was amended so as to abolish the franchise for floating currencies which had appreciated. The regulation therefore expired on 31 March 1980. Having been obliged to amend the monetary compensatory amounts when there was a change in the value of the pound sterling, on 2 April 1980 the Commission adopted Regulation (EEC) No 846/80, amending Regulation (EEC) No 2140/79 as regards the abolition of monetary compensatory amounts for the United Kingdom in certain sectors and their introduction in other sectors (Official Journal 1980, L 91, p. 1). By that regulation, which entered into force on 7 April 1980, the date of its publication in the Official Journal, it fixed positive monetary compensatory amounts, in particular in the dairy sector, for the United Kingdom, but maintained the method of calculation in relation to the ECU and the franchise of 1.5C points provided for by Regulation No 652/79. Following a further change in the value of the pound sterling, amongst other currencies, Regulation No 846/80 was replaced bv Commission Regulation No 967/80 of 18 April 1980 altering the monetary compensatory amounts (Official Journal 1980, L 103. p. 1). That regulation maintained the same method of calculation and the same franchise, but abolished the positive monetary compensatory amounts applicable to the United Kingdom in most sectors, including the dairy sector, on the ground that the amounts thus calculated were negligible in relation to the average value of the products in question. In the preambles to Regulation No 846/80 and No 967/80, the Commission stated: The Commission informed traders of this development in a communication published in the Official Journal of 9 April 1980 (Official Journal 1980. C 87, p. 12). On 23 April 1980 the Council adopted Regulation (EEC) No 1011/80, amending Regulation No 652/79 on the impact of the European monetary system on the Common Agricultural Poliev (Official Journal 1980, L 108, p. 3). Article 1 of that regulation, which entered into force on 26 April 1980, the day of its publication in the Official Journal, is worded as follows:
“... in order to avoid a hiatus in the system resulting, in particular, in an increase or a reintroduction of monetary compensatory amounts for certain Member States, it appears necessary, in view of the overriding public interest and as a precautionary measure pending a final decision on the matter by the Council, to continue to apply the system in its present form, to wit, the calculation of monetary compensatory amounts in relation to the ECU and taking account of the franchises provided for bv Regulation (EEC) No 652/79.”
“With effect from 1 April 198C the date ‘31 March 198C’ appearing in the second subparagraph of Article 5 of Regulation (EEC) No 652/79, shall be replaced bv ‘30 June 1980’, without the individual rights acquired by operators being thereby affected.”
2. Between 1 April 1980 and 26 April 1983 the plaintiff in the main proceedings, Staple Dairy Products Limited, exported milk products from the United Kingdom to other Member States of the Community. The détendant in the main proceedings, the Intervention Board for Agricultural Produce, the authority responsible under British law for, amongst other things, the pavment of sums provided by the Community for the purposes of the Common Agricultural Policy, granted it monetary compensatory amounts in relation to those exports on the basis of the amounts fixed by the aforementioned Commission regulations, that is to say, applying the franchise of 1.50 points to the percentage rate calculated. Staple Dairy Products Limited brought an action in the High Court claiming that it was entitled to monetary compensatory amounts without deduction of the franchise. Considering that its decision depended upon the validity and interpretation of provisions of Community law, the High Court stayed the proceedings and referred the following questions to the Court of Justice for a ruling under Article 177 of the EEC Treaty:
“(1) Having regard to the date prescribed in Article 5 of Council Regulation (EEC) No 652/79, as amended bv Article 1 of Council Regulation (EEC) No 1264/79, were the competent authorities in the United Kingdom bound in respect of transactions undertaken between 1 April 1980 and 26 April 1980 inclusive to pay monetary compensatory amounts on exports of milk products from the United Kingdom to other Member States of the European Communities, without making a deduction of 1.50 percentage points?
2) Is Commission Regulation (EEC) No 84b/8C adopted after the date prescribed in Article 5 of Council Regulation (EEC) No 652/79, as so amended, invalid for lack of competence or for anv other reason in so far as it purported prior to the publication or Council Regulation (EEC) No 1011/80 to reduce the monetar} compensatory amounts payable on exports of milk products from the United Kingdom to other Member States of the European Community by 1.50 percentage points?
3) With regard to Article 1 of Council Regulation (EEC) No 1011/80:
a) What is the effect of that provision with regard to transactions undenaken relating to expons of milk products from the United Kingdom to other Member States in the period between 1 April 19S0 and 26 April 1980?
b) What is the nature of the individual rights of operators there referred to, how and in what circumstances are such rights acquired and in what way are they not to be affected?”
3. The order for reference was received at the Coun Registry on 10 April 1981. In accordance with Article 20 of the Protocol on the Statute of the Court of Justice of the EEC, written obsenations were lodged by Staple Dairv Products Limited, represented by David Vaughan. QC. and R. G. Clinton, Solicitor, by the British Government, represented b\W. H. Godwin of the Treasury Solicitor's Office, acting as Agent, by the Council of the European Communities, represented by us Legal Adviser, Bernhard Schloh, acting as Agent, and by the Commission of the European Communities, represented by Richard Wainwright, a member of its Legal Department, acting as Agent. Upon hearing the report of the Judge-Rapporteur and the views of the Advocate General, the Court decided to open the oral procedure without any preparatory inquiry.
II — Written observations
1. (a) In relation to the first and second questions, Staple Dairy Products Limited submits that after the expiry of Regulation No 652/79 on 31 March 1980 the Commission was no longer empowered to act and the Intervention Board was no longer empowered to make payments as if the validity of that regulation had been extended. Upon the expiry of Regulation No 652/79 the position reverted to the status quo ante, so that the Commission acted illegally in fixing the monetary compensatory amounts in such a way as to apply the franchise after 31 March 1980. A legal vacuum or hiatus which ought to be avoided is not created because the Council does not act in the wav proposed bv the Commission within the period suggested by the Commission. Secondly. Staple Dairy Products Limited maintains that, even if Commission Regulation No 846/80 did have the effect of extending the franchise, that regulation can only take effect from the date of its publication in the Official Journal, namely 7 April 198C. and cannot affect the position between 31 March 1980 and 7 April 1980. In conclusion, Staple Dairy Products Limited suggests that the answers to the first and second questions should be: “Upon the expiry of the date prescribed in Article 5 of Council Regulation No 652/79 as amended (namelv after 31 March 1980) until 26 April 1980: (i) The Commission had no power to adopt as from 7 April 1980 Commission Regulation No 846/80 (and Commission Regulation No 967/80) in so far as it had the effect of purporting to continue the previous deduction of 1.50 percentage points from the monetary compensatory amounts payable on exports of milk products from the United Kingdom to other Member States; and (ii) The Intervention Board for Agricultural Produce was bound to make pavments of monetary compensatory amounts upon such expons without any such deductions.” (b) The third question raises the issue of retroactive legislation and acquired rights. Bv exporting large quantities of butter between 1 April 19S! and 2b April 1980, Staple Dairy Products Limited acquired individual rights of the kind expressly protected by Regulation No 1011/80 and was therefore entitled to receive monetary compensatory amounts without deduction ot the franchise. In any event, the Council acted unlawfully in adopting Article 1 of Regulation No 1011/80 if, by so doing, it extended the application of the regulation to exports effected before the date of its adoption. According to various decisions of the Court, such a retroactive effect is contrary to the general principles of Community law. An exception is not justified in this case, for Regulation No 1011/80 was not adopted in pressing economic circumstances. The third question should therefore be answered as follows: “With regard to Article 1 of Council Regulation No 1011/80, in the case of the exponation of dairy produce from the United Kingdom to other Member States, monetary compensatory amounts are not subject to the 1.50 per cent deduction, when the right to receive the monetary compensatory amounts accrued between the period 1 April 1980 to 26 April 1980 (both dates inclusive).”
2. The observations of the United Kingdom Government are confined to the second question, which puts in issue the powers of the Commission. It maintains that, contran. to the Commission's assertions, the temporary absence of a Council decision extending Regulation No 632/79 did not result in a legal vacuum or a hiatus in the system. Since the Council regulations adopted subsequent to Regulation No 652/79 all expressed prices, amounts and representative rates for the purposes of the Common Agricultural Policy in ECU, they were not legally dependent on Regulation No 632/79. Therefore the expiry of that regulation on 31 March 1980 could not have led to serious practical difficulties. In any event, there was not a hiatus in the system for applying the franchise rules, because, with the expiry of Regulation No 652/79 amending Regulation No 974/71, the latter reverted to its original form and ought to have been applied in the same way as before the adoption of Regulation No 652/79. Commission Regulation No 846/80 was therefore adopted without any legal basis. However, the question of the Commission's powers does not need to be answered in this case, since the position created by Regulation No 846/80 was regularized retroactively by-Council Regulation No 1011/80, extending the validity of Regulation No 652/79 with effect from 1 April 1980 until 30 June 1980. In a consistent series of cases the Court has recognized that in the system of monetary compensatory amounts a limited retroactive application is permissible provided that it is justified in the public interest and provided that the acquired rights and legitimate expectations of individuals are respected. Those conditions are met, since Regulation No 1011/80 was necessary in the public interest to avoid any interruption in the maintenance of the level of agricultural prices and since it made express provision for any acquired rights of individuals which might be affected. In the alternative, the British Government submits thai if the Court should consider it necessary to examine the issue of the Commission's powers, its ruling should be confined to the facts of the case and should not extend to a general proposition concerning the Commission's legislative powers in a legal vacuum. The only question to be resolved in this case is whether, in altering the monetary compensatory amounts, the Commission was entitled to take account of the franchises provided for bv Regulation No 652/79.
3. The Council, whose obsen-ations are confined to the third question, first presents the background to the case. The system of franchises was introduced in a limited form in 1974. In 1975, a general franchise of 1.25 points was applied to floating currencies which had depreciated. This figure was raised to 1.50 points in 1976. By Regulation No 652/79, the franchise of 1.50 points was applied to all floating currencies, irrespective of whether they had appreciated or depreciated. Article 1 of Regulation No ICI 1/60 was worded so as to achieve two aims: first, to render that article applicable to all transactions with effect from 1 April 1980 and, secondly, to ensure that individual rights which might have been acquired by traders before the date of the entry into force of the regulation would not be affected by such retroactive application. in so doing, the Council was guided bv the case-law of the Court, particularly the ludgments of 25 January 1979 in Case 98/ 7$ Rackc v Hauptzollamt Mainz ([1979] ECR 69) and Case 9S/7X Decker \ Hauptzollamt Landau ([1979] ECR 101), according to which the retroactive effect of a Community measure may be justified “exceptionally ... where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected”. Both those conditions were satisfied. It was in fact a matter of overriding public interest that the system of monetary compensator) amounts, including the franchises, should be applied in the period 1 to 25 April — the later date being the day before the regulation entered into force — in exactly the same way as it was applied up to 31 March 1980. Furthermore, legitimate expectations were respected. The franchise system has for many years been an inherent part of the system of monetary compensatory amounts, so that no trader could reasonably have hoped that it would be abolished. That view is all the more valid in view of the fact that the Commission's proposal on the extension of Regulation No 652/79, its Regulation No 846/80 and its communication to traders of 9 April 198C all envisaged the maintenance of the franchise without any change whatsoever. Under these circumstances, the clause concerning individual rights in Article 1 of Regulation No 1C11/8C should be interpreted as covering onlv individual rignts acquired bv an individual or an undertaking as a result of an individual decision of the national authorities of a Member State granting him or it the right to receive monetar) compensatory amounts without deduction of the franchise. In conclusion, the Council suggests that the answer to the third question should be that, even in the period from 1 to 25 April 1980, the system of monetary compensatory amounts, including the franchise of 1.50 points, was fully applicable.
4. (a) After describing the history of the franchise system, the Commission explains, in relation to the first question, that it fixes monetary compensatory amounts, taking into account the franchises, and that it is thereafter for the Member States to grant or charge monetary compensatory amounts on particular transactions at the rates fixed. As the Court confirmed in its judgment of 13 February 1979 in Case 101/78 Granaria v Hoofdproduktschap voor Akkerbouwprodukten ([1979] ECR 623), Community regulations must be presumed valid unless and until they are declared invalid by a competent court. Therefore the authorities in the United Kingdom were obliged to apply the monetary compensatory amounts fixed by the Commission regulations, subject to their right to bring an action to annul those regulations under Article 173 of the EEC Treaty. The first question should therefore be answered as follows: “So long as Commission Regulations No 846 and No 967/80 have not been declared void under the Treaty, the national authorities are bound to apply the monetary compensatory amounts fixed by those regulations.” (b) The second question raises a point of principle as to the powers and duties of the Commission in the management of the Common Agricultural Policy where there is a failure to act by the Council and, as a result, a “legal vacuum”. The adoption by the Commission of Regulation No 846/80 constituted a valid exercise of its powers, since the following conditions were satisfied: (aa) There was a legal vacuum following the Council's failure to extend Regulation No 652/79 in March 1980. The failure to extend that regulation removed the legal basis for the application of the ECU in the Common Agricultural Policy, with the result that an essential element for the fixing of monetary compensatory amounts was lacking. A return to the unit of account (UA) by the inverse application of the coefficient fixed in Article 1 of Regulation No 652/79 would not have been possible as the value of the ECU had meanwhile changed; (bb) The Commission was empowered and obliged to take action to ensure the continued functioning of the Common Agricultural Policy. The concept of continuity, or a similar legal principle, is recognized by the courts of several Member States. It has also received some recognition in the decisions of the Court of Justice. The principle requires public authorities to ensure that the services for which they are responsible function regularly and continuously. The power and duty to act to prevent undue disturbance to the Common Agricultural Policy as a result oi a legal vacuum are conferred on the Commission by the first indent of Article 155 of the Treaty. In support of this argument, the Commission refers to the judgment of the Court of 5 May 1981 in Case 804/79 Commission v United Kingdom ([1981] ECR 1045). Its powers are also derived from Regulation No 974/71, by which it is obliged to fix monetary compensatory amounts and therefore to ensure that the system of monetary compensatory amounts continues to function properly. (cc) The Commission had validly exercised its powers to take measures of a temporary and conservatory nature by applying the ECU and the franchises as they existed on 31 March 1980. That was in accordance with economic reality and consistent with the fact that Regulation No 652/79 established a link between the introduction of the ECU and the dismantling of monetary compensatory amounts. On the other hand, it would not have been practicable to continue to apply the ECU and the system for fixing monetary compensatory amounts but to return to the franchise system as it applied prior to the entry into force of Regulation No 652/79, for that solution would have separated the provisions of the regulation on the franchises from those concerned with the ECU. The Commission was also unable to “freeze” the monetary compensatory amounts at their existing level pending the Council's decision, since that would not have taken account of the appreciation of sterling on the exchange markets. (dd) In any event, the retroactive extension of the expiry date of Regulation No 652/79 by Regulation No 1011/80 ratified the measures taken in the meantime by the Commission. Therefore, the Commission suggests that the answer to the second question should be that consideration of Commission Regulation No 846/80 has disclosed no factor of such a kind as to affect its validity. (c) As to the third question, the Commission takes the view that Council Regulation No 1011/80 had the effect of retroactively extending the expirv date of Regulation No 652/79 to 30 June 1980. The criteria laid down by the Court in its judgments of 25 January 1979 (Racke and Decker, cited above), concerning the retroactive effect of a legislative measure, were met in this case. The extension of Regulation No 652/79 was required by the principle of legal certainty itself, in order to fill the vacuum which existed. Traders can have had no legitimate expectation that the franchise system applied from the beginning of April 1980 would be other than that put into effect by Regulation No 846/80, since both the Commission's proposals for the establishment of a definitive agrimonetary régime and its proposal for the extension of Regulation No 652/79 would have left the franchise unchanged. The Commission explains that the phrase “without the individual rights acquired by operators being thereby affected” was inserted as a precautionary measure, to cover the eventuality of an alteration by the Council of the franchise system which existed by virtue of Regulation No 652/79. In this case, no individual right was acquired. The Commission therefore proposes that the third question should be answered as follows: “Article 1 of Council Regulation No 1011/80 is to be interpreted as extending the expiry date of Regulation No 652/79 from 1 April 1980. It did not affect monetary compensatory amounts applied in accordance with the provisions of Commission Regulations No 846/80 and No 967/80.”
III — Oral procedure
At the sitting on 20 January 1982 oral argument was presented by the following: D. Vaughan, Queen's Counsel, for Staple Dairy Products Limited, the plaintiff in the main proceedings; Lord Mackay of Clashfern, Queen's Counsel, F. Jacobs, Barrister, and W. Godwin, acting as Agent, for the British Government; G. Guillaume, acting as Agent, for the French Government; B. Schloh, Legal Adviser, for the Council of the European Communities; and, for the Commission of the European Communities, R. Wainwright, a member of its Legal Department. Counsel also answered questions put by the Court.
The Advocate General delivered his opinion at the sitting of 16 March 1982.
Decision
1. By an order of 2 March 1981, which was received at the Court on 10 April 1981, the High Court of Justice referred to the Court for a preliminary ruling under Article 177 of the EEC Treaty three questions on the interpretation of Article 5 of Council Regulation No 652/79 of 29 March 1979 on the impact of the European monetary system on the Common Agricultural Poliev (Official Journal 1979, L 84, p. 1), as amended by Council Regulations No 1264/79 of 25 June 1979 (Official Journal 1979, L 161, p. 1) and No 1011/80 of 23 April 1980 (Official Journal 1980, L 108, p. 3), and also on the validity of Commission Regulation No 846/80 of 2 April 1980, amending Regulation No 2140/79 as regards the abolition of monetary compensatory amounts for the United Kingdom in certain sectors and their introduction in other sectors (Official Journal 1980, L 91, p. 1).
2. Those questions were raised in the course of an action brought by Staple Dairv Products Limited against the Intervention Board for Agricultural Produce, the authority responsible for, inter alia, the payment of sums provided by the Community for the purposes of the Common Agricultural Policy. Between 1 and 26 April 1980, the plaintiff exponed milk products from the United Kingdom to other Member States. The Intervention Board for Agricultural Produce granted it monetary compensatory amounts in respect of those exports pursuant to Commission Regulation No 846/80, which fixed the monetary compensatory amounts in relation to the European Currency Unit, known as ‘the ECU’, and took account of the franchises introduced by Council Regulation No 652/79, in this case 1.5C points.
3. The system of franchises, which has existed in various forms since 1974, consists in reducing by a certain rate the monetary gap used for the fixing of monetary compensatory amounts, in order to avoid overcompensation through the application thereof. It was maintained by Council Regulation No 632/79, which, following the creation of the European monetary system, substituted the ECU for the unit of account for the purposes of the application of the Common Agricultural Policy. The rate of the franchise fixed by that regulation was at the material time 1.50 points for Member States, such as the United Kingdom, whose currencies did not belong to the European monetary system.
4. Regulation No 652/79, which was originally to apply until 30 June 1979, was extended until 31 March 1980, when it expired following the Council's failure to adopt in time the Commission's proposals to consolidate the existing agrimonetary provisions or, alternatively, to extend the regulation's validity until 30 June 1980.
5. On 2 April 1980, however, following a change in the value of the pound sterling, the Commission adopted Regulation No 846/80 by which it introduced, for milk and milk products inter alia, positive monetary compensatory amounts with regard to the United Kingdom, whilst maintaining the method of calculation in relation to the ECU and the franchise of 1.50 points. That regulation, which entered into force on 7 April 198C, was replaced following a further change in the value of the pound sterling, amongst other currencies, by Commission Regulation No 967/SC of 18 April 1980 altering the monetary compensatory amounts (Official Journal 1980, L 103, p. 1), which maintained the same method of calculation and the same franchise, but abolished the positive monetary compensatory amounts applicable to the United Kingdom in most sectors, including the dairy sector, in view of the fact that the amounts thus calculated were negligible in relation to the average value of the products in question.
6. In the preambles to Regulations No 846/80 and No 967/80 it is stated that: “in order to avoid a hiatus in the system resulting, in particular, in an increase or a reintroduction of monetar} compensatory amounts for certain Member States, it appears necessary, in view of the overriding public interest and as a precautionary measure pending a final decision on the matter by the Council, to continue to apply the system in its present form, to wit, the calculation of monetary compensator) amounts in relation to the ECU and taking account of the franchises provided for by Regulation (EEC) No 652/79”. On 9 April 1980 the Commission published a communication to this effect in the Official Journal (Official Journal 1980, C 87, p. 12).
7. It was not until 23 April 1980 that the Council adopted Regulation No 1011/80, amending Regulation No 652/79 on the impact of the European monetary system on the Common Agricultural Policy (Official Journal 1980, L 108, p. 3). Article 1 of that regulation extended Regulation No 652/79, with effect from 1 April 1980, until 30 June 1980, “without the individual rights acquired by operators being thereby affected”. The regulation entered into force on 26 April 1980, the date of its publication in the Official Journal.
8. Under those circumstances, Staple Dairy Products Limited considered that no franchise was applicable to the monetary compensatory amounts payable on exports of milk products from the United Kingdom to other Member States carried out between 1 and 26 April 1980. It therefore brought an action in the High Court for a declaration that it was entitled to monetary compensator) amounts without deduction of the franchise.
9. Considering that a decision of the Court of Justice was necessary to enable it to give judgment, the High Court submitted the following questions for a preliminar) ruling:
“(1) Having regard to the date prescribed in Article 5 of Council Regulation (EEC) No 652/79, as amended by Article 1 of Council Regulation (EEC) No 1264/79, were the competent authorities in the United Kingdom bound in respect of transactions undertaken between 1 April 1980 and 26 April 1980 inclusive to pay monetar) compensatory amounts on exports of milk products from the United Kingdom to other Member States of the European Communities, without making a deduction of 1.50 percentage points?
2) Is Commission Regulation (EEC) No 846/80 adopted after the date prescribed in Article 5 of Council Regulation (EEC) No 652/79, as so amended, invalid for lack of competence or for any other reason in so far as it purported prior to the publication of Council Regulation (EEC) No 1011/80 to reduce the monetary compensatory amounts payable on exports of milk products from the United Kingdom to other Member States of the European Community by 1.50 percentage points?
3) With regard to Article 1 of Council Regulation (EEC) No 1011/80:
a) What is the effect of that provision with regard to transactions undertaken relating to exports of milk products from the United Kingdom to other Member States in the period between 1 April 1980 and 26 April 1980?
b) What is the nature of the individual rights of operators there referred to, how and in what circumstances are such rights acquired and in what way are they not to be affected?”
10. It is convenient to begin with the third question, which in substance seeks to ascertain whether the effect of Article 1 of Council Regulation No 1011/80 of 23 April 1980 is retroactively to confirm the application of monetar, compensatory amounts by the competent national authority to exports of milk products from the United Kingdom to other Member States between 1 and 25 April 1980, the day before the date on which Regulation No 1011/80 entered into force, those amounts being granted in accordance with Commission Regulation No 846/80, having regard in particular to the proviso contained in that article concerning the individual rights acquired by operators.
11. The plaintiff in the main proceedings maintains that that provision is invalid, because it produces an unlawful retroactive effect, in so far as it extends to exports carried out during the said period.
12. In this regard, the Court has already stated in its judgments of 23 January 1979 in Case 98/78 (Rackev Hauptzollamt Mainz [1979] ECR 69) and Case 99/78 {Decker v Hauptzollamt Landau [1979] ECR 101) that although in general the principle of legal certainty precludes a Community measure from taking effect from a point in time before its publication, it may exceptionally be otherwise where the purpose to be achieved so demands and where the legitimate expectations of those concerned are duly respected. Those conditions are satisfied in this case.
13. Indeed, with regard to the first condition, it may be said that the aim to be achieved required the reestablishment with effect from 1 April 1980 of the system instituted by Regulation No 652/79. That basic regulation introduced a number of measures concerning the European monetary system in relation to the Common Agricultural Policy. Those measures form an indissoluble whole, covering both the replacement of the unit of account by the ECU for the purposes of the Common Agricultural Policy and the introduction of the franchise in order to avoid distortions in prices and also gradually to abolish monetary compensatory amounts.
14. Under those circumstances, the reestablishment of the system instituted by Regulation No 652/79 with prospective effect, excluding the period between 1 and 25 April 1980, would have resulted in suspending for that period the application not only of the franchise but also of the ECU, which would have meant recourse to the unit of account for the calculation of the amounts payable under the Common Agricultural Policy. Since such recourse to the unit of account would necessarily have involved the reconversion of the amounts which had in the meantime been fixed in ECU, by application of the inverse of the conversion coefficient provided for by Regulation No 652/79, that is to say, without regard to the changes in the value of the ECU which had since occurred, there would have been an interruption in the maintenance of agricultural prices, which might have led to disturbances in the agrimonetary system as a whole.
15. Furthermore, there was in this case proper respect for the legitimate expectations of those concerned, as required by the second of the two conditions which must be satisfied in order for a Community measure to be able to produce an effect at a date prior to its entry into force. Indeed, the situation at that time gave no cause for the traders concerned to expect the franchise system to be abolished after 31 March 1980. On the contran, the history of the rules in question, as well as their scope and purpose, were such as to lead traders to conclude that the franchise, which for years had constituted a well-established feature of the system of monetary compensatory amounts, would be maintained for some time. The same conclusion may also be inferred from the proposals presented by the Commission to the Council in February- and March 1980, which clearly provided for the maintenance of the system, albeit on a slightly amended basis, as well as from Commission Regulations No 846/80 of 2 April 19S0 and No 967/80 of 18 April 1980 and from the communication published bv the Commission on 9 April 1980.
16. It must also be remembered that Commission Regulation No 846/80, as is clear from its preamble, introduced positive monetary compensatory amounts in certain sectors, including the dairy sector. Since the effect of Council Regulation No 1011/80 was retroactively to confirm those provisions, it is even less capable of interfering with the legitimate expectations of exporters, who, without that regulation, could not legally have obtained anv monetarv compensatory amount.
17. The content and scope of the proviso included in Article 1 of Regulation No 1011/80 concerning the individual rights acquired by operators must be examined in the light of the foregoing considerations. The plaintiff in the main proceedings contends that that proviso must be understood as laving down a general right for exponers to be treated solely in accordance with the legislation in force at the time when the exports were made, which would mean that the franchise could not be applied to their exports made between 1 and 25 April 1980.
18. Such an interpretation, which would amount to the total exclusion of the application of Regulation No 1011/80 prior to the date of its enirv into force, cannot be accepted. It would be contrary to the clear wording of the regulation and would in addition impair its efficacy by calling in question the proper functioning of the system.
19. The reference in Article 1 of Regulation No I0I1/8C to individual rights acquired by operators refers only to rights definitivei) conferred on those operators by individual decisions adopted by the competent national authority between 1 and 25 April 1980.
20. The answer to the third question should therefore be that Article 1 of Council Regulation No 1011/80 of 23 April 1980 retroactively confirmed the application by the competent national authority of monetary compensatory amounts to exports of milk products from the United Kingdom to other Member States made between 1 and 25 April 1980, those amounts being granted in accordance with Commission Regulation No 846/80, that is to say in relation to the ECU and taking account of the franchise of 1.50 points, without prejudice, however, to rights definitively conferred on operators by individual decisions adopted by the competent national authority between 1 and 25 April 1980.
21. In view of the reply to the third question, it is no longer necessary to reply to the first and second questions.
Costs
The costs incurred by the United Kingdom, the Council and the Commission, which submitted observations to the Court, are not recoverable. As these proceedings are, in so far as the parties to the main proceedings are concerned, a step in the action pending before the national court, costs are a matter for that court.
On those grounds, THE COURT, in answer to the questions referred to it by the High Court of Justice by order of 2 March 1981, hereby rules: